Why are REIT / Stock prices dropping? Will I buy now or wait? (as a Singapore Investor in 2024)



I’ve been getting a lot of questions on what is driving the drop in REIT and stock prices of late, and how things may play out going forward.

So I wanted to release this FH Premium article written earlier this week, to give you guys an insight into my latest thinking.

If you find this useful – do sign up for FH Premium for more premium articles like this.


So there have been quite a bit of developments since my Monday article, and I just wanted to pen a quick update to share latest views.

On Monday, I said what could cause me to change my views are:

  1. Interest rates staying higher for longer (or going up)
  2. Recession

Why are REIT / Stock prices dropping?

Powell’s Pivot from the Pivot – Less interest rate cuts in 2024?

Well, literally the day after, Powell at a panel discussion gave the following remarks:

If price pressures persist, he said, the Fed can keep rates steady for “as long as needed.”

“The recent data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence,”.

That’s a pretty big change of tone from Powell.

For much of this year he has stuck to the position that despite hot inflation data, the Feds still see themselves cutting interest rates in 2H 2024.

With this comment, he finally acknowledges the hot inflation, and its potential impact to delay interest rate cuts.

In some ways, it’s basically walking back the “pivot” in late 2023.

Market reaction? Only 1 Interest Rate cut priced in for 2024

If you recall, at the start of the year the market was pricing in up to 7 interest rate cuts in 2024.

As of today, the market is only pricing in 1 interest rate priced cut, in Sep 2024.

With a 1.0% chance of a rate hike.

That’s a massive change in interest rate outlook, that is bound to impact stock / REIT prices at some point.

Long Term interest rates have broken above key levels – pressuring REIT / stock prices

At the same time, long term interest rates have continued their march up and broken above key levels.

The US 10 year yield is back above 4.5%.

The last time it was this high was in Sep 2023 – after which yields went as high as 5.0% and caused huge volatility in financial markets (leading to the Treasury / Fed Pivot in late 2023 as you would recall).

Singapore 10 year yields have similarly tracked US 10 year yields.

Going as high as 3.4% this week.

Again, the last time Singapore 10 year yields were this high was Sep 2023, and that led to a huge sell-off for REITs.

US Interest Rates staying higher prevents other central banks from cutting interest rates

The problem is that the USD is the world reserve currency, in which commodity prices are denominated.

Let’s say you’re the European central bank, and Powell just said he may not cut interest rates so soon.

If you still go ahead and cut interest rates, the Euro will weaken against the USD.

And because you are a net importer of oil / gas / commodities – this leads to higher import prices in USD, and higher inflation.

So US interest rates staying high has pretty big knock on effects for the whole world.

Sure you can cut interest rates before the Feds, but you risk currency depreciation in a world where inflation is high.

Price action is very poor – suggesting further downside is possible for stocks / REITs

At the same time, price action of the market has been very poor this week.

Crypto markets look to be in a short term downtrend, and the next support level for Bitcoin is $59,000 (after which it is no man’s land until $52,000).

The NASDAQ is not looking good too – signs continue to indicate a topping out process.

MACD has crossed into negative territory.

The previous 2 times this happened was:

  • Aug 2023
  • Late 2022/early 2023

Both of which signalled periods of volatility for markets.

Crypto markets seem to frontrun traditional markets like stocks / REITs?

It’s interesting because I’ve noticed that in the past 12 – 18 months, crypto markets have generally frontrun traditional markets by about 2 – 3 weeks.

So crypto markets will drop first – followed by stocks

And on the recovery – crypto recovers first, followed by stocks.

Here’s an example for reference.

Bitcoin bottomed in mid Oct 2023, while NASDAQ only bottomed in late Oct 2023 (2 – 3 weeks gap approx.).

Assuming this logic holds – then the recent drop in crypto prices may suggest weakness for traditional markets ahead.

It also means that you cannot wait for traditional markets to bottom before buying crypto, as crypto bottoms ahead of traditional markets.

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Singapore REITs have broken below key support levels this week

Closer to home, many of the REITs have also broken key support levels.

Ascendas REIT for example broke recent support levels this week.

The next support would be back to Oct 2023 and 2022 lows – which if it gets there I would likely add (full disclosure I added Ascendas REIT at the 2.6ish support level this week).

You will note that the Lion-Phillip S-REIT ETF is close to Oct lows.

So under the surface, a lot of REIT prices are very weak (although you will note that so far the big blue chips have not yet dipped to Oct lows).

Singapore 10 year yields have shot up to 3.4%.

The last time they went this high was Sep 2023, and REITs dropped quite significantly after that in Oct 2023.

I’m not saying REIT prices are definitely going back to Oct 2023 lows, but the conditions are set up for it, and if they do I would be adding.

I will be updating the FH Stock / REIT watchlist this weekend to share positions I am looking to pick up, and rough price targets.

Potential market correction ahead?

I’ve always said that I was concerned about a potential Q2 correction because:

  • Market is very overbought
  • Q2 is a period of lower liquidity
  • Higher interest rates were bound to hit stocks at some point

Throw in the latest Powell comments, and we have the conditions for a short term correction.

To be clear, I am not saying we will get a correction, but am saying the conditions are in place for one.

But mid term path doesn’t change?

That being said, so far at least, I still don’t see a change in the mid term path.

The thing to note is that the US economy is very financialised.

Unlike Singapore, retail investors in the US have a much larger proportion of their net worth exposed to the stock market.

In some ways, in the US – the stock market is the economy.

Which is why I said the early pivot from the Fed/Treasury in late 2023 was a mistake.

By allowing US financial markets to inflate, they allowed US household sentiment to inflate, driving spending up, and sending inflation back up.

Which is why if they are serious about breaking inflation, they need to bring stock markets lower – hitting consumer spending, and forcing companies to retrench.

The problem of course, is that this is an US election year.

Despite what Powell may say, I think the chance of him allowing a significant stock market decline (and the consequent impact on the US economy) is not likely in 2H 2024.

If things get bad, this being an election year, Powell will likely step in at some point.

So I still see sell-offs as opportunities to average in.

But again – some short term caution is warranted, given all the warning signs above.

Will I buy stocks / REITs now or wait? (as a Singapore Investor in 2024)

Full disclosure that I added to REIT and crypto positions this week, but I also took profit on some of my US positions.

Short term there are a lot of warning signs, so I would be cautious at this levels.

I would let the market play out for now, and let technical analysis guide on my next moves (updates and portfolio changes shared on FH Premium).

If the downtrend continues, best to let it play out before adding.

If the downtrend finds a support and reverses, I would add to positions.

In particular REITs are looking very juicy, with many high quality REITs trading at close to Oct lows (or lower).

But until long term interest rates stabilise and turn lower, it’s tough to call a bottom in REITs too.

Whatever the case – I will be updating the FH Stock / REIT watchlist this weekend to share positions I am looking to pick up, and rough price targets.

This is why a higher cash allocation makes sense this decade (vs last decade)

I think this discussion above really illustrates the difference between investing today, and investing in the past decade / 2020-2021 period.

Namely – that inflation is a gamechanger.

Inflation is a fundamental limitation on the ability of central bankers / governments to maintain loose monetary policy.

In the past decade / in 2020 – 2021, with low inflation, there was no fundamental limit on the ability of central banks to keep interest rates at zero.

This means you could run a higher risk exposure, and know that the Feds would have your back each time.

Today’s climate is different because inflation places limitations on monetary policy.

We can see that as much as Powell wants to cut interest rates in an election year, hot US inflation is causing him problems.

At the same time, higher interest rates mean that you’re getting close to 4% yield on cash risk free (whereas in the past decade it was close to 0%).

Full disclosure I am running about 50% cash levels today.

Depending on how the correction plays out, I would likely increase risk exposure further in 2024.

Much will depend on how attractive prices get, and how policy makers react.

You can see my full portfolio breakdown on FH Premium.

What happened with the Iran-Israel War last week?

The wild card here though, is the Iran-Israel war.

Here’s what I shared with FH Premium readers earlier in the week

In case you missed it, the sequence of events last week was broadly:

  1. Israel bombed Iran’s embassy in Syria, killing seven of Iran’s top military advisors
  2. Iran vowed to retaliate – which it did over the weekend in a massive missile/drone strike
  3. Most of the missiles/drones were shot down, and damage to Israel was minimal
  4. However, Israel is now threatening to respond to Iran’s direct attack against Israel (while the US is trying to discourage any escalation)
  5. *Update* as of Friday afternoon, Israel has now retaliated with an attack against Israel

Is this likely to escalate further?

Now the base case here, is that this saga does not escalate any further (for now).

You can see how Iran tried to telegraph their moves well in advance, and how after the attack they made it clear that the matter was concluded from their perspective and they would not retaliate further (unless attacked by Israel).

You also see how Biden made it very clear that US would not support Israel in any further retaliatory strike against Iran.

So US and Iran clearly do not want the war to escalate further.

Looking at the muted moves in oil, gold and US Treasury prices this morning, the market clearly agrees with this.

And for the record, my own personal view is for no further escalation (for now).

Iran clearly does not want to escalate, and Biden does not want a middle east war driving oil prices up as he heads into election.

But this is war, and war is unpredictable

But the point I want to make is this.

Back in Oct 2023, we said the greatest risk of the Israel-Hamas attack was that this would eventually spiral into a broader middle east conflict.

Well, over the weekend – Iran just fired a massive missile / drone attack against Israel, with missiles originating from Iran itself.

So yes, base case is no further escalation (for now).

But you can see how much things have evolved from Oct 2023, and how much closer we are to a broader middle east conflict today.

And in war, you cannot predict every single moving part with perfect certainty.

So it would be foolish to think that this cannot escalate further as 2024 plays out.

There is a non-zero chance that Iran-Israel may end up in direct conflict

There is a school of thought that Israel would want to escalate the conflict with Iran, while they still have US support on their side.

Otherwise give it another 10 years, and US military / financial capability to join in a war in the middle east might be significantly diminished – not to mention that if Biden loses the reelection in Nov, Trump’s commitment to Israel is not so clear.

Or maybe the Israelis don’t want to be seen as weak, and use the opportunity to retaliate against Iran (perhaps to take out their nuclear capabilities).

Or maybe Netanyahu wants something to distract from his political troubles, and chooses to launch a counterattack against Iran.

In war, you cannot predict everything exactly.

There are situations where nobody wants to escalate the conflict, and yet the outcome is a massive escalation in conflict.

You only need to look at WWI and WWII for case studies of how this can play out if parties are not careful.

What if Iran-Israel engage in direct war? Impact on Financial Markets?

Worst case if Iran-Israel engage in direct conflict, what happens next?

The most immediate effect is for oil price to jump.

A jump in oil price would have huge implications for inflation, and likely delay Fed rate cuts even further.

Short term, this would be bad for risk assets.

But look forward into the mid term, and war is almost always inflationary.

The mid term response is likely to be higher money printing from the US (whether to support the war effort, or to subsidise oil price, or to boost domestic consumption).

So in a scenario like that, you want to be able to survive the immediate term selloff, and yet use that selloff to buy risk assets because of a mid term inflationary outcome.

As investors – hope for the best, but prepare for the worst

As investors, you want to hope for the best, but prepare for the worst.

Base case, I am not anticipating an escalation in the Iran-Israel conflict for now.

But I would be foolish not to prepare for the eventuality.

Take a look at your portfolio just to understand what would happen in the (unlikely) event of an Iran-Israel war.

If you can stomach the loss (and perhaps average into declines), then no action is required.

If the thought of a loss of that magnitude makes you uncomfortable, you may be running too much exposure.


I’ve been getting a lot of questions on what is driving the drop in REIT and stock prices of late, and how things may play out going forward.

So I wanted to release this FH Premium article written earlier this week, to give you guys an insight into my latest thinking.

I will be updated the FH REIT / Stock Watchlist this weekend, to share my watchlist and the REITs / Stocks I am looking to pick up.

For my latest up to date views on markets, and my personal portfolio positioning, do subscribe for FH Premium.


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  1. Hi question on TA. Why is it a better idea to buy when it bounces off a support level and reverses, compared to when the stock price is falling?

    • Pretty much what Josh said.

      FA/Macro doesnt really help to call a bottom, unless it’s an obvious one like Feds doing unlimited QE in March 2020.

      Which means that if you just buy blind, you risk buying a falling knife. TA is not perfect, but it provides some guidance on whether a bottom may be in.

      Key is to not treat TA as gospel. It’s all about probabilities. A bounce off a support indicates a higher probability of a bottom, but not definitive.

  2. “If you still go ahead and cut interest rates, the Euro will weaken against the USD.”
    Mrs. Yellen visited president Xi and probably asked for USD support. Just before that trip Lagarde talked the Euro lower (to make a USD more attractive?).

    “…Powell will likely step in at some point.”
    Bill Fleckenstein mentioned maybe ten years ago, one day the market would take away the printing press from the cb.
    And there they are. Isn’t it an illusion to think the Fed can do anything to stop anything? Aren’t cb buying Au? Clearer: Aren’t cb selling USD for own currency and Au? I see an exchange in reserves and wasn’t it the BIC which made Au a TIER1 asset? There will be a maelstrom of course, when the Olympic sinks.

    “Update* as of Friday afternoon, Israel has now retaliated with an attack against Israel” (sic)
    A most interesting “error” FH. I thought in Henry Kissinger’s 2012 prediction for the end of Israel “in ten years”.


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